Toyota’s Operating Procedures and Guidance to Achieving 6+ Sigma

If you don’t have guidance to where you desire to go, you’ll either not get there, or it will take you much longer. Toyota’s Guiding Principals apply to everyone in the company. From the CEO down to the janitor. These Guiding Principles, categorized into 4P’s, have taken Toyota to a Six Sigma company.

Toyota recently changed its Guiding Principals. Toyota is one of the most studied companies in the world and their competitive secrets have been exposed. One of those secrets is their Guiding Principles. I really believe that Toyota’s change of their Guiding Principles is a subterfuge, as these originals are more detailed and expansive.

Toyota’s Guiding Principals discussed as a 4 P’s Model

This is a high-level overview of Toyota’s Guiding Principals. The 4P’s model organizes Toyota’s Guiding Principals.

The first P is philosophy. This involves Long Term Thinking. American companies focus on short-term thinking, probably because of the required quarterly financial reporting. For instance, Apple Computer uses a long view like Toyota.

Above all, the second P is Process. Every Value Stream includes all the processes starting with customer order to finishing with customer delivery. Every process has waste. Waste is anything a customer will not pay for. Lean Six Sigma uses the acronym DOWNTIMES to help pinpoint the areas of waste.

Importantly, amongst the other P’s is the third P, People, and Partners. These are two very different things and are discussed later, in much more detail. Some similarities between the two are respect and partnership.

The last P, Problem Solving is certainly not the least important. In fact, it is what makes Toyota great. Toyota’s Continuous Improvement program is rapid (11 Continuous Improvement ideas per person per year) and directional (towards a Toyota vision or challenge). They will not expand into a new plant unless they can accommodate the full force of the Continuous Improvement Program. Their Continuous Improvement constantly involves problem-solving.

Next, I discussed the first 2 P’s in more detail.

Toyota’s Guiding Principals: 1’st P – Philosophy Step 1

1) Guiding Principals help base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.

A great leader marches towards a vision. There will be ups and downs on that road but the vision increasingly comes closer to reality. The shareholders may surprise you if you decide to forsake short-term performance for the benefits of long-term gain. Apple is a leader like Toyota because they follow this philosophy.

Toyota’s Guiding Principals: 2’nd P – Process Steps 2 – 8

2) Create continuous process flow to bring problems to the surface.

The Guiding Principals consider Continuous flow as the ideal state. Continuous flow means that as the upstream process completes its task, the downstream process becomes ready for that task. Flow is the ideal state for any system to be in. Therefore, every company should push to create a continuous flow.

3) Use pull systems to avoid overproduction.

The first tug in a pull system comes from the customer. This is Build to Order. The Toyota Production Guiding Principals dictate that the system Builds to Order, which means that every process or service is working on a product or service that a customer has ordered. The benefit is that you are not overproducing.

4) Level out the workload.

Takt Time is the heartbeat of customer orders. It is simply the rate of customer-driven throughput. As an example, let’s say Takt time is one minute. Then a product or service is requested every minute. If this is leveled, then your system will change to adapt so that all processes take about 1 min. In your system, every step in the process must complete within a minute. Some processes may only take 30 seconds. The concept of leveling out the workload in your system is to even out the workload so ideally, all processes take about a minute. There are some cases where this may not be possible.

Steps 5 – 8

5) Build a culture of stopping to fix problems, to get quality right the first time.

Subsequently, this concept is all about quality and perfection and is based on culture. It means that, if you detect a defect, you stop everything and determine the cause of that defect. Firstly, this philosophy creates two advantages: 1) you start to rid your processes of defects, and 2) your workers get better at problem-solving. Every product or service line has problems, the goal should be to surface those problems and address them.

6) Standardized tasks are the foundation for continuous improvement and employee empowerment.

The goal of a Standardized Task is not to beat up an operator for not following it but to use it as the starting point of a Continuous Improvement program. The Process Operator owns the Standardized Task. The Operator should post it and follow it. Continuous Improvement improves standardized tasks.

7) Use visual control so no problems are hidden.

Visual Control is simply a way to avoid creating a problem with signage. It could be something as simple as an outline of tools on a pegboard all the way to a tray of parts or data that if not completely used, signals a problem.

8) Use only reliable, thoroughly tested technology that serves your people and processes.

People are your company’s most adaptable tool. Hence verify that technology integrates well into your people system.

Toyota’s Guiding Principals: 3’rd P – People & Partners Steps 9 – 11

9) Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

Hence, leaders should have a firm understanding of how, where, and what is value the company is adding to the product or service. Leaders should foster teamwork and an environment of Continuous Improvement. Furthermore, leaders should walk the processes that add value so they can evaluate performance themselves.

10) Develop exceptional people and teams who follow your company’s philosophy.

Consequently, Guiding Principals regard employees as part of the company team and make an effort to grow them. This can be through taking classes, teaching classes, presenting to management, etc. In conclusion, your company will grow through the growth of your employees.

11) Respect your extended network of partners and suppliers by challenging them and helping them improve.

With these Guiding Principals Partners and Suppliers become more and more important as you become Lean. If you have a pull system then, ideally it will connect with the supplier or partner pull system. Therefore Toyota financially invests in their suppliers, with money and employees, to support the supplier’s successful integration with Toyota.

Toyota’s Guiding Principals: 4’th P: Problem Solving, Continuous Improvement and Learning – Steps 12 – 14

12. Go and see for yourself to thoroughly understand the situation.

This has two very important components. First, if a problem is found, then those working on the problem need to go and see the problem for themselves. Second, management must periodically walk the processes where the company is adding value for their customers. This is the most important thing a company does and management should be very familiar with it.

13) Toyota’s Guiding Principals dictates that decisions are made slowly and by consensus, thoroughly considering all options; implement decisions rapidly.

This is how Toyota operates. Every company has its own decision-making process. Use this to rethink how decisions are made. Consider this just an example. However, deciding slowly and acting quickly is a good option.

14) These Guiding Principals dictate a learning organization through relentless reflection and continuous improvement. The most important output of a Continuous Improvement program is the creation of a learning organization. Think about the importance of having an organization that just keeps learning and improving.

In Conclusion

Above all the road to greatness requires company guidance. Subsequently, these are the Guiding Principals that moved Toyota to the leader of automobile manufacturers. Check this guidance against your own company guidance and determine if either your or Toyotas’s guidance could be improved. Certainly, guidance should be directed at everyone in the company. Toyotas Guiding Principles have directed everyone in the company to their achievement of 6+ Sigma.

Build your system with the tools of Toyota.

Use Lean Six Sigma to create Operational Excellence.